Economics 321

Fall 2011

Final Exam

Instructions

  1. You are to write a short essay (one to two pages) in response to each of these questions. Send your essays as an email attachment to Jeff and Jon no later than 6pm, Thursday, December 15.
  2. The questions ask you to make decisions or give opinions on issues. Your essays will be evaluated on how effectively you support your decisions/opinions, not on what those decisions are. You may be able to make a convincing argument on either side of an issue.
  3. The answers to these questions are to be developed and written individually.

Question 1: Socially responsible endowment management

A committee of students has occupied the president's office for a week insisting that Reed invest endowment money only in socially responsible corporations. As president, you have finally convinced them to leave, but the price of regaining access to your office is a promise to consider the feasibility and desirability of their claims.

  • From a flier circulated by the Socially Conscious Undergraduate Majority (SCUM): “Reed's endowment is being used to employ child labor in Asia, to foul the air of America's cities, and to build weapons that are used in reckless wars of adventurism. This is intolerable! We will not allow our tuition money to be used in these ways! Reed must divest immediately from corporations that engage in such anti-social actions and invest exclusively in socially conscious firms.”
  • Will George, Professor of Political Science: “What do you mean by ‘socially conscious’? What you see as sweat-shop oppression may be the only way for a teenager with a disabled father to help feed her younger siblings and keep them in school. Without a little pollution, nothing could be produced. Your war of adventurism is someone else's patriotic cause. Who is to make the judgments about what is ‘socially conscious’?”
  • Ross Stephens, Professor of Economics: "Reed (or anyone else) selling off a class of assets will have no impact whatsoever on their value, as long as the broader market is interested only in earning high returns. 'Socially responsible investment' has no impact on the firms it is intended to punish."

Write a short essay outlining your decision.

Essay 2: Measuring college value added

In an unpublished paper, George Kaufman and Geoffrey Woglom attempt to measure college “productivity” or “value-added” as the residual from a regression of outcome measures on measures of the quality of student “inputs.” Critique the methodology and implementation of this study, and assess whether it is helpful in assessing the quality of institutions such as Reed.

Essay 3: Assessment tools

Suppose that the Northwest Commission on Colleges and Universities decides that in future accreditation reviews, all member colleges must provide quantitative evidence of the effectiveness of their educational program using one of the following assessment instruments:

Draft a (brief) plan to bring Reed into compliance with this requirement.